The Renault-Nissan alliance has been studying production of a $3,000 car to rival Tata Motors' $2,500 car in the Indian market, but Ghosn said no decision has been reached yet.

"We will go ahead with it if it's possible," Ghosn told a news conference at the Tokyo Motor Show.

"But we are confident, because somebody else is already doing it." Ghosn added that the partners would aim to launch the car to market in 2010 so as not to fall too far behind Tata.

Ghosn said he was scheduled to visit Bajaj in India next Monday to discuss the project, adding that most features of the car had already been decided.

"It's going to mainly be made by them, with our support," he said.

Last week, a senior executive at Bajaj, India's No.2 motorcycle maker, said he expected the feasibility study to be ready in "six to eight weeks".

Nissan had said last month it would decide whether to develop a $3,000 car next year, though it could not say when such a model would be ready for the market.

Tata Motors has grabbed the industry's attention with its bold plan to launch a "people's car" priced at 100,000 rupees, or $2,500. A prototype is due to be shown at an auto show in India early next year.

Tata has said its car would be a four-door model with a 600cc rear engine for both petrol and diesel versions, using moulded plastic and modern adhesives, with an initial production run of 250,000 to 300,000 units.

Nissan is also working on developing a separate family of entry-level cars benchmarked in price against Renault's popular 5,000-euro Logan model.

Shares of Nissan ended down 0.7 percent at 1,094 yen, in line with a 0.6 percent fall in the Nikkei average.

Nissan, Japan's third-biggest automaker held 44 percent by Renault SA, had been expected to suffer a fall in core profits on weak domestic sales and as demand for the Titan pickup and other high-margin light trucks shrank in its biggest market, the United States, due to heated competition and expensive fuel.

But driven by solid sales of smaller cars in the United States and in emerging markets, such as the Middle East and Mexico, Nissan's global sales grew 6.6 percent to 941,000 vehicles for the July-September second quarter. Revenue rose 13 percent to 2.618 trillion yen ($22.9 billion) -- above market expectations.

"This is very good -- much better than expected," Credit Suisse auto analyst Koji Endo said.

"Provided that the U.S. subprime problem and currency rates aren't going to be bad, I believe we may be able to add expectations of a revision."

Second-quarter operating profit was 218.71 billion yen ($1.91 billion), beating an average estimate of 183.5 billion yen in a survey of four brokerages by Reuters Estimates. That lifted its profit margin back to the year-ago level of 8.4 percent, and above 6.1 percent in the first quarter.

Net profit slid 27 percent to 120.11 billion yen from the year before, when it booked extraordinary gains from the sale of shares in its truck affiliate and had a lower tax rate.

The results, which came after market hours in Tokyo, pushed Renault's shares up 3.4 percent in Paris.

"You can expect more in the second half," Carlos Ghosn, chief executive of both Nissan and Renault, told a news conference.

Having anticipated soft industry-wide demand in the United States from the beginning of the year, Ghosn said the current downturn in the market would not derail Nissan's sales plans.

Nissan, which is owned 44 percent by Renault SA, announced after the close on Friday that its operating profit for the July-September quarter rose 12 percent from a year earlier, handily beating the market consensus.

The automaker had been expected to suffer a fall in core profits on weak domestic sales and as demand for the Titan pickup and other high-margin light trucks shrank in its biggest market, the United States, due to heated competition and expensive fuel.

But Nissan's global sales grew 6.6 percent to 941,000 vehicles in the quarter and group revenue jumped by 13 percent.

Nissan's stock soared 12 percent to 1,259 yen as of 0200 GMT, set for its largest one-day rise since Sept 29, 2000 when it gained 15.5 percent. Its rivals also jumped, with Toyota Motor Corp and Honda Motor rising about 4 percent.

The benchmark Nikkei average was up 1.2 percent.

"Nissan's profit figures were better than expected and sales volumes are rising. This has given investors confidence," said Koichi Ogawa, chief portfolio manager at Daiwa SB Investments.

"But there are still worries about the dollar and consumption in the United States."

Nissan's July-September operating profit was 218.71 billion yen ($1.92 billion), beating an average estimate of 183.5 billion yen in a survey of four brokerages by Reuters Estimates.

Nissan joined Honda in reporting improved earnings. Its operating profit jumped 48 percent last quarter on brisk sales of its fuel-efficient CR-V crossover. Toyota Motor Corp, the world's biggest automaker, is due to report on November 7.

Many analysts had said they expected Nissan to fall short of its full-year targets, which call for operating profit to rise 3 percent to 800 billion yen, partly due to the yen's recent resilience against the dollar and soaring commodity prices.

Following the earnings announcement, JP Morgan reiterated its "neutral" rating on the stock but said the risk of Nissan missing its full-year estimates had receded and that this would likely be good for the share price over the near term.

"There are signs that the company is recovering from a host of problems, including product quality and inventories, and results were encouraging," JP Morgan analyst Takaki Nakanishi wrote in a note to clients.